Australian Property

Viewing posts in the Australian Property category

Australia hits peak mortgage debt

ScreenHunter_5590 Dec. 19 15.43 By Leith van Onselen The Reserve Bank of Australia (RBA) has released its household debt ratio data for the September quarter, which reveals that outstanding mortgage debt has hit the highest ever level when compared against GDP and household incomes. As shown in the next chart, the ratio of housing debt to GDP was a record 87.7% as at September 2014, eclipsing the previous record high 86.9% as at March 2010 (see next chart). In a similar vein, the ratio of housing debt to household disposable income was a record 139.0% as at September 2014, easily eclipsing the June 2010 peak of 134.7%...
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Melbourne drives auction clearances lower

ScreenHunter_19 Mar. 13 13.12 The national auction clearance rate fell over the weekend, driven by a big decline in Melbourne. According to RP Data, the national weighted average preliminary auction clearance rate was 64.3% over the weekend, which was down 0.9% from the 65.2% clearance rate recorded last weekend. Sydney’s clearance rate rose by 5.0% to 76.2%, whereas Melbourne’s fell to 61.2% (last weekend 65.9%). Brisbane, which typically only has a small number of auctions, experienced a rise in its clearance rate (up 3.5% to 50.8%). Overall auction volumes (1,622) were down significantly on last weekend’s...
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RP Data weekend property market update

ScreenHunter_18 Mar. 18 17.58 Click to view RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 21 December 2014. This week’s report includes: Latest weekly dwelling value results; Auction results & clearance rates; Latest median house & unit prices; Average time on market & vendor discounts; Mortgage market activity; and New listings...
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RP Data weekly Australian house price update

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen In the week ended 18 December 2014, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, rose by 0.27% (see next chart). Home prices rose in all major capitals (see next chart). So far in December, home values nationally have risen by 0.40%, with all capitals except Sydney rising (see next chart). Over the past 12 months, home values have risen by 8.51% at the 5-city level, again with all capitals rising in value (see next chart). The next chart plots the daily movements on a 14-day moving average,...
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The history of Australian property values (redux)

ScreenHunter_5518 Dec. 17 15.43 By Philip Soos and Paul D. Egan This chart pack presents the latest statistics for 2014, updating the dataset provided earlier last year. When adjusted for inflation and quality, housing prices have boomed nationwide since 1996, hitting a peak in 2010, before undergoing a slight fall and rise. On current trends, a new, higher peak is likely to be set in 2015. Melbourne has been the epicentre of a number of historical real estate bubbles, with the latest iteration being no different. Compared to the other capital cities, Melbourne has experienced the largest escalation in housing prices,...
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Why forecasts of a bigger construction boom are wrong

ScreenHunter_01 Mar. 03 22.48 By Leith van Onselen Master Builders Australia (MBA) has forecast bullish growth in Australian new home construction, tipping that dwelling commencements will rise to over 200,000 for the first time in Australia's history in the year to June 2016. From The AFR: Low borrowing costs will fuel accelerate demand in the long-neglected NSW market, pushing the market figure of 194,310 housing starts in the year to June 2015 up to 201,557 in the year to June 2016, the MBA says. “Interest rates will remain low, working to release pent-up demand built up during a decade-long period of underbuilding...
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NSW Government rides the property wave

ScreenHunter_01 Feb. 17 18.55 By Leith van Onselen The epic investor-driven Sydney property boom has been well documented, with home prices there rising by around 26% over the past 18-months, according to RP Data (see next chart). One stakeholder that has been a big beneficiary of the Sydney property boom is the State Government, which has enjoyed a massive escalation in stamp duty receipts, rising by more than 85% over the past 18-months to $6.1 billion in the year to November, on the back of a 41% rise in transaction volumes and the above price rises (see next chart). The problem for the State Government in the...
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Perth and Darwin in mining-related rental bust

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen SQM Research has released its rental vacancy data for November, which revealed a slight 0.1% monthly increase in the national vacancy rate to 2.2%, but no change from November 2013: However, the unwinding of the mining boom continues to have a drastic impact on Perth and Darwin: Perth and Darwin have continued to record alarming increases in vacancies, whilst many of the other capital cities have remained stable year-on-year. However, Hobart and Melbourne have recorded yearly declines. SQM Research believes the falls in Hobart most likely relate to the recovery in its...
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RP Data weekend property market update

ScreenHunter_18 Mar. 18 17.58 Click to view RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 14 December 2014. This week’s report includes: Latest weekly dwelling value results; Auction results & clearance rates; Latest median house & unit prices; Average time on market & vendor discounts; Mortgage market activity; and New listings...
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Auction clearances trending down

ScreenHunter_02 Feb. 13 11.55 The national auction clearance rate fell over the weekend, driven by decreases in Melbourne and Sydney. According to RP Data, the national weighted average preliminary auction clearance rate was 65.2% over the weekend, which was down 1.4% from the 66.6% clearance rate recorded last weekend. Sydney’s clearance rate fell by 0.5% to 71.2%, whereas Melbourne’s fell to 65.9% (last weekend 67.1%). By contrast, Brisbane, which typically only has a small number of auctions, experienced a rise in its clearance rate (up 12.1% to 47.3%). Overall auction volumes (3,351) were down on last weekend’s...
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Australian property and the economy we want

ScreenHunter_5361 Dec. 09 17.23 One of the key themes amongst a lot of the comments on any given real estate related piece here at MB is the discussion about how and when there is some form of correction (if we set aside the spruik of endlessly elevated, or foreign or investor demand into the stratosphere) in Australian real estate prices, about how this comes about, and about how the economy manages that. At one point earlier this week I found myself chewing over the Australian economy with the Oz analyst of an investment bank (in the UK – we mulled it by skype) and in particular the experiences of the UK/Eire (he is Irish) and...
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A spectacular Sydney property investor bubble

ScreenHunter_02 Apr. 23 10.34 By Leith van Onselen The speculator frenzy that has engulfed Sydney’s housing market just won't quit, with today's Lending Finance data for October, released by the ABS, once again smashing all records, with both the value and proportion of mortgages going to New South Wales investors surging to another all time high. As shown below, the value of investor loans in New South Wales (read Sydney) continues to rocket, with Victoria (read Melbourne) – the second hottest market – also experiencing strong growth: According to the ABS, investor finance commitments in New South Wales in...
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Gotti: Chinese property investment will save us!

ScreenHunter_4459 Oct. 13 10.08 By Leith van Onselen Business Spectator's Robert Gottliebsen ('Gotti') has today hailed the swarm of Chinese investment in Australian real estate as the new savior for the Australian economy: As oil prices suffered more sickening blows this week, and iron ore and coal languish, only one force stands between Australia and a serious recession - Chinese investment in our residential property market. And in time that investment will move more heavily into other areas, particularly agriculture and tourism. ... in Australia’s two largest cities, Chinese investment has come to dominate the market....
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RBA backs negative gearing reform (discussion)

Its_Time_badge From the overnight AFR interview: AFR: The Murray review of the financial system released this week suggested that there was a tax bias in the system that is encouraging investor housing. Is that something, do you think, that needs to be looked at in terms of making it easier for you to conduct your own monetary policy? MR STEVENS: I think, without wanting to get into tax policy, he would not be the first person, or the committee would not be the first group, to make the observation that there are aspects of the tax system that could be seen as somewhat in this space. So plenty of people have said...
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RP Data weekly Australian house price update

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen In the week ended 11 December 2014, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, rose by 0.16% (see next chart). Home prices rose in all major capitals except Sydney (see next chart). So far in December, home values nationally have risen by 0.13%, with three capitals rising (see next chart). Since the start of the year, home values nationally have risen by 7.32%, with all major capitals rising in value (see next chart). Over the past 12 months, home values have risen by 8.07% at the 5-city...
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A confidence hit for Aussie property?

ScreenHunter_07 Nov. 22 08.59 By Leith van Onselen Yesterday's "very disturbing" consumer sentiment report from Westpac was potentially significant for Australia's housing market. According to the Westpac report, overall consumer sentiment "is now at its lowest level since August 2011 when it briefly fell below 90. Prior to that you have to go all the way back May 2009 to see a period when the Index printed consistently below today’s level". Importantly, optimism around the housing market has evaporated. The sub-index tracking assessments of ‘time to buy a dwelling’ fell 10.8% in December and is now down 19.3% over...
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Where goes investor demand goes house prices

ScreenHunter_12 Sep. 23 12.54 By Leith van Onselen Yesterday's housing finance data for October, released by the ABS, revealed a housing market that has become even more reliant on investors to generate growth. As shown in the next chart, the near parabolic growth of investor mortgages continued in October, up 20% over the year and comprising an unprecedented 48.2% of total housing finance commitments (excluding refinancings) over the year - easily exceeding the mid-2004 ("bubble") peak of 46.4% (see next chart). While investor mortgage demand continues pushing new highs, the story is entirely different for...
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Macroprudential will end the property boom

jhvbuj There's lot's of cynicism around APRA's new macroprudential regime, for good reason in some ways: it's late, it's weak and it's opaque. But a clear view of this still suggests the conclusion that it will work to slow investment property lending and house prices. There are three reasons why. The first is tackled by Jonathon Mott of UBS: Strong growth in lending to property investors – APRA is concerned about growth in investment property portfolios materially above a 10% threshold. This will be an important risk indicator for APRA in considering if additional action is required. We see this...
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New home finance continues to give

ScreenHunter_01 Mar. 03 22.48 By Leith van Onselen Today’s housing finance data for October registered a small decline in buyer demand for newly constructed dwellings after a prolonged period of strength (see next chart). The number of finance commitments for new dwellings (i.e. construction plus new) fell by a seasonally adjusted 0.2% in October to be up 7.2% over the year and tracking some 19% above the 5-year moving average level. The current 'boom' is approaching the highs of the post-GFC episode (which was fueled by significant first home buyer stimulus). It also appears to be more enduring, which is good news...
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Investor mortgage mania crowds out…everyone

dnews-files-2013-04-crowded-bus-jpg By Leith van Onselen The Australian Bureau of Statistics (ABS) has released housing finance data for the month of October, which registered a 0.3% seasonally-adjusted rise in the number of owner-occupied finance commitments over the month: The result beat analysts’ expectations, who had expected a 0.1% rise in owner-occupied finance commitments in October. The number of owner-occupied housing finance commitments excluding refinancings fell by a seasonally-adjusted 1.4% over the month to be tracking 6% above the five-year moving average level. They were also down 4.2% on October 2013 and...
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Deutsche: APRA’s Clayton’s macroprudential

imgres From Deutsche: APRA’s new mortgage standards focused on quality, not quantity of lending In its letter to the banks, APRA indicated that it will increase the level of supervisory oversight on mortgages given recent developments in the housing and mortgage markets. That said it does not propose to introduce across the board increases in capital requirements or caps on particular types of loans. Whilst at first glance the proposed loan serviceability tests may be slightly more conservative than existing practices, we believe the overall impact on bank profitability is likely to be relatively...
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Judith Sloan’s negative gearing delusion

Capture By Leith van Onselen After her dreadful defences of negative gearing in July and September (thoroughly debunked here and here), The Australian's Judith Sloan has returned with another abusive post aimed squarely at us "lefty" doomsayers that dare question the merits of Australia's famed tax expenditures on investment property. Let's take a look at Sloan's latest installment: HERE we go again. If only the government were to ditch negative gearing on residential real estate then our budget woes would disappear... Who is calling for this? The Fairfax dailies — whose diminishing number of...
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Macroprudential arrives, not before time

LogoMACRO Late yesterday APRA and ASIC released details of Australia's new macroprudential regime: The Australian Prudential Regulation Authority (APRA) has today written to authorised deposit-taking institutions (ADIs) outlining further steps it plans to take to reinforce sound residential mortgage lending practices. These steps have been developed following discussions with other members of the Council of Financial Regulators. In the context of historically low interest rates, high levels of household debt, strong competition in the housing market and accelerating credit growth, APRA has indicated it...
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Australia’s FIRE economy toasts its host

ScreenHunter_5361 Dec. 09 17.23 By Leith van Onselen While the manufacturing sector continues to gasp for air, with capex slumping to the smallest share of GDP on record: Last week's national accounts release for the September quarter confirmed that Australia's FIRE economy - Finance, Insurance and Rental, Hiring & Real Estate Services – continues to grow from strength to strength, rising to a new record high 11.3% share of the Australian economy (see next chart). Since financial markets were first deregulated in the mid-1980s, the FIRE economy has grown at nearly twice the pace of the rest of the...
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Melbourne housing market activity peaks

ScreenHunter_02 Apr. 09 08.45 By Leith van Onselen Victoria's Department of Transport, Planning and Local Infrastructure (DTPLI) has released November's data on the number of housing transfers and mortgage lodgements/discharges, which suggests that Victoria's (read Melbourne's) housing market has peaked. According to the DTPLI data, the volume of housing transfers in Victoria fell by 11% in November, but more importantly - since the data is not seasonally adjusted - transfers were down by 3% over the year and look to be past their peak (see next chart). The situation facing mortgage discharges and lodgements is less...
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